There’s one positive to closing the company’s books: Finance won’t have to worry about the task for another year. But starting the process early — as in, right now …
Will shave weeks off the year-end cycle.
Sure, you can just bump up the year-end process by a week or two. The earlier you start the financial reporting and closing, the earlier it’ll be over with, right? But here’s some food for thought: The average company takes nearly six days to close its month-end books, with another five spent on reporting.
Then the real time crunch at year-end happens. Once Finance gathers info from other departments and compiles it, a company only has a few weeks (if it’s lucky) to correct any issues.
What’s the major issue for closing? Of course, it’s tempting to blurt out the S-word: spreadsheets. Excel’s a reliable reporting tool, but it’s hard for Finance to control what goes into a report, especially for employees who aren’t used to dealing with numbers on a day-to-day basis.
But business performance management (BPM) systems aren’t a cure-all for lengthy closes, either. Automated programs can help manage spreadsheet overload and speed up the reporting cycle, but they aren’t helpful if the data being compiled isn’t reliable.
Instead of waiting until year-end to pick up on mistakes, switching to a monthly system will give Finance and other departments a chance to hone their closing skills. Keep data accurate and on track by ensuring staffers, at minimum:
- Perform a monthly soft close and a quarterly hard close to keep an eye on how numbers are shaping up
- Reconcile transactions as soon as possible (it makes finding and fixing errors run smoother), and
- Report to every department how their data quality stacks up.
Not only does running a mini-close every month keep incoming data as accurate as possible, but it’ll ease crunch-time on finance and accounting departments when it’s time for the real deal.
